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Rediff News  All News  » Business » Ship owners avoid ransom insurance, seek naval help

Ship owners avoid ransom insurance, seek naval help

November 21, 2008 02:55 IST

Indian ship owners who have so far not borne additional insurance costs against piracy are awaiting three more naval vessels and marine commandos to ensure a safe voyage through the Gulf of Aden.

"We are in talks with the government to get the additional security requirements fulfilled," said a spokesperson of The Great Eastern Shipping Company, the largest private sector Indian flag carrier. Last week, Jag Arnav, the company's cargo ship, was defended by the Indian Navy's INS Tabar when it faced the threats of pirates in Gulf of Aden.

INS Tabar also recently defended two merchant vessels from pirate attacks and destroyed one of their mother ships.

However, this is not enough for the safety of the vessels that pass through about 775 miles of turbulent area. The Indian government is also seeking international cooperation along this important route for global trade.

Indian shipping companies'  reluctance to take piracy insurance is probably linked to sky-rocketing costs. According to the site of London-based corporate security firm BGN Risk, piracy in the Gulf of Aden could increase insurance and transport costs by $400 million. Special risk insurance for crossing the Gulf has soared from $500 a voyage last year to $20,000 now, the company said.

The International Maritime Bureau said there has been an unprecedented 100 incidents of pirate attacks this year off the coast of Somalia compared with just a handful four years ago. International media reports said nearly 700 sailors have been taken hostage, with more than a third of them--and 15 vessels--still awaiting ransom payments.

"Insurance against ransom is available for the owners who want it," said Yudhishthir Khatau, managing director, Varun Shipping Company which has not accessed this facility yet. 

There are about 18 gangs operating in Gulf of Aden off the coat of Somalia. According to an estimate, they are using up to 60 vessels including "mother ships" which take pirates into deep waters.

About 90 per cent of Indian sea trade crosses the Suez Canal to travel to Europe and the US. The alternate route for the Indian ships via the Cape of Good Hope on the southern tip of Africa adds some three weeks to journeys.

Abhineet Kumar